Flat demand for iPhones in Europe, and hitches in getting products to the Chinese market, trampled Apple's latest quarterly profits, CEO Tim Cook has admitted. The head honcho was speaking to investors after the company posted its below-expectations results.
Cook and chief bean counter Peter Oppenheimer also suggested that Apple had suffered from its own hype machine, as the speculation about new products hurt the sales of "old" products such as the iPhone 4S.
Apple's revenue and profits for Q3 2012 rose year-on-year but fell compared to the quarter before. The gross revenue for Q3 was $35bn compared to $28.6bn for the same period in 2011, with profits of $8.8bn, compared to $7.3bn.
But compared to Q2 the numbers were down. The previous quarter posted revenue of $39.2bn and profits of $11.6bn.
European chills affect Apple
iPhone sales in Europe seemed to be at the heart of Apple's slip. Discussing iPhone sales, Cook said: "The geography that did not perform well was Europe. Europe was essentially flat, slightly positive year-on-year and that really hampered our total result."
In contrast iPhone sales in the US were up 50 per cent and in Japan were up 45 per cent compared to the same time last year.
Gross revenues across Europe were lower than expected, though the Brits kept buying, Cook said:
We see a difference between the countries. The UK was relatively solid at 30 per cent growth, but France, and Greece and Italy were particularly poor, and Germany was also similarly a single-digit positive growth for the quarter. Eastern Europe was strong, materially stronger than Western Europe, but obviously the Western European countries drive the preponderance of the revenue in that segment. So, we're certainly seeing a slowdown.
Frothing speculation about devices also suppressed demand for the iPhone, according to both Cook and CFO Oppenheimer.
"Our weekly iPhone sales continue to be impacted by rumors and speculation regarding new products," said Oppenheimer – after being pushed to explain the 25 per cent drop in sales for the product from 35.1 million in Q2 to 26 million this quarter.
He said that the transition to the next raft of products - ie, the anticipated launch of the iPhone 5 in September was "driving most of the decline."
But it was useless to rail against that rumour mill, Cook said, despite its distorting effect on the sales cycle:
we try very hard to keep our product roadmap secret and confidential, and we go to do extreme activities to try to do that [...] That, however, doesn't stop people from speculating or wondering and will never do that. So, it's a great thing about this country, people can say what they think and so forth, and so, I'm not going to spend any energy trying to change that...
Oh and that Chinese iPad lawsuit didn't help either
Cook also mentioned the delay in launching the new iPad in China as a factor that held back sales in the last quarter - Apple finally bought the right to sell iPad there from last week after cracking a $60m deal with Proview who sued it over the trademark. Apple saw a sequential decline in profits from China: with Q2 revenue for Greater China at $7.9bn and a Q3 revenue of $5.7bn. ®